By Teh Joo Lin and Shuli Sudderuddin

The businesswoman already owned a semi-detached house. Two years ago, she spent $400,000 to buy another property.

Her choice? A four-room HDB resale flat in Sunset Way, for which she paid about $80,000 above valuation.

The 50-year-old, who declined to be named, said it was for her two grown-up children to live in, for them to 'gain some independence'.

But then, last November, she sold it at a $100,000 profit, which she used to fund another purchase - an executive maisonette.

She claimed she is not speculating in HDB properties.

But there is growing concern that private home owners like her are snapping up such homes - either to flip them for gains or for rental income - driving up prices in the process.

Resale flat prices rose 3.9 per cent in the final three months of last year to hit a new record, taking the full-year jump to 8.2 per cent.

An HDB spokesman said it is unlikely that rising resale prices can be caused by any single factor, such as purchases by private home owners or permanent residents.

Prices are 'influenced by a myriad of factors such as pace of economic growth and market sentiments', the spokesman said.

Real estate agents said there is growing interest among private home owners in acquiring an HDB flat.

However, they note that the size of this group may be too small to influence prices greatly.

Private home owners, who can buy only resale flats and without subsidies, can sell the flat if they have lived in it for at least one year.

Those who buy three-room or bigger flats can rent out rooms. But they must live in the flat during the period of the sub-letting, and comply with other rules.

If they have lived in the flat for at least three years, they can rent out the entire unit.

Latest figures show that the median rental for a three-room flat in Ang Mo Kio is $1,450. Units in good locations can fetch yields of up to 8 per cent, said housing agents.

Last Wednesday, National Development Minister Mah Bow Tan said the HDB would conduct a review to check if any rules are 'encouraging or allowing' people to speculate in HDB flats.

It would also step up efforts to ensure people do not get away with abusing the system.

Mr Andrew Tan, a senior division director from Dennis Wee Group, said private home owners eyeing HDB flats include those in their 40s and 50s, and with savings of up to $200,000.

Since other types of private homes are beyond their reach, they look to three-room flats - which may be easier to rent out .

'As an investment, a flat will not give super-high returns, but it's a safe bet,' he said, noting the volatile stock market and low returns from fixed deposits.

ERA agent Richard Sim received more than 10 queries from private home owners in the past year.

'Most want to buy the flats for investment as they can make money in terms of rental or profit if they sell them. Some do buy them to retire in as well.'

The HDB has warned that those who rent out entire flats without approval and before fulfilling the minimum occupancy period can be punished.

From January 2008 to December last year, 56 owners were fined $1,000 to $21,000. Some even lost their flats.

Whatever their buying motives, Mr Syed Abdullah Alhamid, a senior division director with ERA, said private home owners can push up prices as they are cash-rich.

He said: 'Some have two private homes and let go of one. With the money, they can pay a high price for the location of the flat they want. They will take you on.'

This article was first published in The Straits Times.